European markets gain on week after speech by Putin

Bloomberg

Sun, Mar 23, 2014 - Page 15

European stocks posted their biggest weekly gain since St Valentine’s Day as concern dissipated that the Ukraine crisis would lead to wide-ranging disruption to trade after a speech from Russian President Vladimir Putin.

Bayerische Motoren Werke AG rose 12 percent after projecting that pretax profit would climb by at least a high single-digit percentage this year. Legal & General Group PLC slumped 9.6 percent as British Chancellor of the Exchequer George Osborne scrapped rules forcing people to buy annuities with their pension funds.

The STOXX Europe 600 Index rose 1.8 percent to 327.91 this week, paring its decline for the year to 0.1 percent, as Putin used an address to Russian lawmakers to allay concern that he would send troops into eastern Ukraine. The benchmark fell 4.7 percent in the first two weeks of the month, as the newly appointed prime minister of Crimea called a referendum to determine whether the region would leave Ukraine and join Russia.

“The absence of further escalation of the geopolitical crisis in Eastern Europe, and no signs of significant economic sanctions against Russia from Europe or the US fueled a sense of relief in the markets this week,” Witold Bahrke, a senior strategist at PFA Asset Management in Copenhagen, wrote in an e-mail.

Russia annexed Crimea after almost 97 percent of voters in a plebiscite on March 16 backed the region’s secession from Ukraine. The US and the EU imposed sanctions on Russian and Crimean officials, and threatened further measures.

European stocks slid briefly after US Federal Reserve Chair Janet Yellen said that US interest rates could increase six months after the central bank’s monthly bond purchases come to an end.

“The Fed meeting didn’t make more than a small dent, since markets chose to interpret the relative hawkishness as a sign of confidence in the US recovery rather than a potential policy mistake,” Bahrke said.

A gauge of US industrial production released on Monday rose a higher-than-expected 0.6 percent last month, following a revised 0.2 percent decline in January.